Cooley Textile's 2001 financial statements are shown below.

Cooley Textile: Income Statement for December 31, 2001 (Thousands of Dollars)
Sales..................................................... $36,000
Operating costs.......................................... 32,440
Earnings before interest and taxes................... $ 3,560
Interest....................................................... 560
Earnings before taxes.................................. $ 3,000
Taxes (40%)............................................... 1,200
Net income............................................. $ 1,800
Dividends (45%).......................................... $810
Addition to retained earnings........................... $990
Suppose 2002 sales are projected to increase by 15 percent over 2001 sales. Determine the additional funds needed. Assume that the company was operating at full capacity in 2001, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase in proportion to sales. Use the projected financial statement method to develop a pro forma balance sheet and income statement for
December 31, 2002. Use the pro forma income statement to determine the addition to retained earnings.

Cooley Textile: Balance Sheet as of December 31, 2001 (Thousands of Dollars) Cash Receivables Inventories $ 4,320 2,880 2,100 $ 9,300 3,500 3,500 12,860 $29,160 ,080 Accounts payable 6,480 9,000 Accruals Notes payable $16,560 Total current liabilities Mortgage bonds Common stock Retained earnings Total current assets Net fixed assets 12,600 Total assets $29,160 Total liabilities and equity